Financial experts no better than Average Joe investors, new study shows

Author: Shannon Roddel

Andriy Bodnaruk

Do professional mutual fund managers make good investors?

One would think so, but not according to a new study co-authored by Andriy Bodnaruk, assistant professor of finance in the University of Notre Dame’s Mendoza College of Business.

In his study, “Do Financial Experts Make Better Investment Decisions?” Bodnaruk, who teaches behavioral finance, analyzes the personal portfolios of 84 mutual fund managers from Sweden and finds no evidence that financial experts do any better than non-experts with similar socio-demographic characteristics.

The research shows that financial experts do not have better stock picking skills, have similar levels of portfolio diversification, and even suffer from behavioral biases like other investors.

Bodnaruk says some managers, particularly those with more experience, seem to be aware of the limitations to their investment skills, as they increase their holdings of mutual fund-related stocks following bad portfolio performance.

“Our results demonstrate that day-to-day knowledge of finance does not improve investment decisions for investors with high levels of general intelligence,” he says. “For street-smart people, financial expertise has limited value. The research was conducted in Sweden; however, these are very smart, well-qualified professionals — no reason to think that as a group they would be distinctly different from U.S.-based managers.”

Bodnaruk’s research interests include empirical corporate finance, portfolio choice and investments. Before coming to Notre Dame, he taught finance at the University of Maastricht in the Netherlands.

Contact: Andriy Bodnaruk, 574-631-4597,

Originally published by Shannon Chapla at on August 27, 2012.